China's official manufacturing purchasing mangers index (PMI) shows improved for the second month in September 2011. The headline PMI rose from 50.9 in August to 51.2 in September, just slightly above market expectation of 51.1.

Input price fell from 57.2 to 56.6 after rising in July, indicating that while inflationary pressure is still present, it has remained relatively stable for now. Last month we noted that the new export orders index fell to below 50 for the first time since the economic recovery. For September, however, the new export orders increased from 48.3 to 50.9, which should provide a small relief for the time being.

While the manufacturing PMI is still showing very modest pace of expansion, the HSBC's survey has been in sub-50 territory for 3 months, so it might be safe to say that manufacturing in China isn't really growing much, if at all. When if we compare the September PMI this year with the same month of previous years, the slight improvement this month might very well be seasonal. It is also worth pointing out that the current September reading is the weakest number since record began if you exclude 2008 as the financial crisis struck.